10 Must Reads for the CRE Industry Today (February 3, 2017) Photo by Win McNamee/Getty Images

10 Must Reads for the CRE Industry Today (February 3, 2017)

 

  1. Hudson's Bay makes takeover approach for Macy's: sourceCanadian department store operator Hudson's Bay Co (HBC.TO) has made a takeover approach for U.S. department store chain Macy's Inc (M.N), according to a person familiar with the matter. Shares of Macy's, which had a market value of about $9.4 billion as of Thursday's close, surged 7.3 percent to $32.96 in morning trading on Friday. Shares of Hudson's Bay, which also owns the Saks Fifth Avenue store, were up 2.1 percent at C$10.26. The company had a market cap of C$1.82 billion ($1.40 billion) as of Thursday's close. Talks between the companies are at an early stage, the person said.” (Reuters)
  2. U.S. Adds 227,000 Jobs in January; Wage Growth Is Muted “Despite brisk hiring, the U.S. unemployment rate rose in January and workers’ wages grew modestly. The steady but unspectacular labor market is likely to keep the Federal Reserve cautious about raising short-term interest rates in the months ahead and could prevent it from colliding with Donald Trump ’s administration as it seeks faster economic growth. Employers added 227,000 jobs in January, the best gain since September, the Labor Department said Friday. That was significantly higher than last year’s average monthly gain of 187,000 jobs. Still, the jobless rate—or the share of Americans in the labor force who are unemployed—rose to 4.8% from 4.7% a month earlier. More Americans came off the sidelines and actively looked for work. That helped to raise the count of unemployed but it could be a sign of increased optimism about the prospect of finding jobs. The average hourly paycheck of private-sector workers grew just 3 cents from a month earlier and a modest 2.5% over the past year. Some economists had expected wage growth to exceed 3%, supported in part by increases in minimum wages across 19 states to start the year.” (The Wall Street Journal)
  3. Yellen Eyes Commercial Real-Estate Froth as Fed Weighs ’17 Risks “A decade after the U.S. housing market collapsed, Federal Reserve officials are watching rising apartment towers as the next potential asset-price bubble, which could add to the debate about the pace of interest-rate hikes this year. Fed Chair Janet Yellen cited commercial real estate prices as ‘high’ in a speech at Stanford University on Jan. 19. That message has been echoed by Governor Jerome Powell, who warned ‘low rates may lead to a reach for yield,’ as well as Boston Fed President Eric Rosengren, who cited luxury housing in his city. While single-family housing prices have had a gradual recovery from the mortgage bust, commercial real estate is showing signs of being overheated in markets such as New York, San Francisco and Boston. Fed officials have mostly said they plan to address potential asset price bubbles with financial supervision, rather than by raising interest rates at a faster pace than they currently expect. But such hot-spots are testing their patience.” (Bloomberg)
  4. How The Fintech Monster Is Eating Commercial Real Estate “The Fintech industry has revolutionized the banking industry. Its far-reaching tendrils have stretched into all areas of lending, which includes the coveted, profitable sector of commercial real estate (CRE). Few divisions in the banking industry can hold a candle to the behemoth numbers that commercial real estate brings to a bank. Not to mention the prestige for a bank to hold accounts of the high net worth people and corporations behind the loans. So, the question is, how scared are banks with the infusion of Fintech banking?” (The Huffington Post)
  5. HPP is in advanced talks to acquire Hollywood Center Studios for roughly $200M: sources  “The publicly traded real estate investment trust, led by CEO Victor Coleman, has leased two new office buildings, in addition to several soundstages, to Netflix over the course of the past year. Now, the West L.A.-based company is in talks to acquire more studio space near those properties. Hudson is in advanced discussions to acquire Hollywood Center Studios, one of the oldest filming locations in California, from a partnership led by the Singer family, who bought the property from Francis Ford Coppola in 1984, The Real Deal has learned. HPP will pay a price in the ballpark of $200 million for the 12 buildings on 7.4 acres of land at 1040 North Las Palmas Avenue in Hollywood, said sources with knowledge of the talks. The REIT’s plans for the site are not known, though sources suspect streaming giant Netflix will take some of the space for filming. This, however, could not be confirmed.” (The Real Deal Los Angeles)
  6. 421-A Real Estate Tax Break Remains Under Scrutiny in Albany “A major tax break for real estate developers was known by its bland tax code designation, 421-a. It had been on the books since the 1970s, but in 2015, Albany lawmakers, including Governor Andrew Cuomo, let it expire. Now, Cuomo has a new proposal to revive it, but the reception has been lukewarm at best. ‘It's on the table,’ said Assembly Speaker Carl Heastie. ‘It's part of the city's affordable housing plan, so it's always something we have to look at. And we will talk about it as a conference as part of the budget, it looks like at this point.’ In 2015, Mayor Bill de Blasio came up with plan for 421-a that would have led to more affordable housing. But the governor shot it down because it included a tax on luxury developments. The governor's reaction was considered by many to be part of the ongoing feud between him and de Blasio. Cuomo's new proposal was first announced late last year and officially introduced as legislation last month.” (NY1 News)
  7. Capital One Leads Half-Billion Loan for Starwood’s MOB Deal “Starwood Property Trust Inc. grabbed a big piece of the medical office building pie—a 1.9 million-square-foot piece—and Capital One helped the REIT seal the deal. Capital One acted as lead arranger and bookrunner for a $534.9 million loan to fund Starwood’s acquisition of a 34-property MOB portfolio spanning a dozen states…The stabilized collection of properties is 95 percent occupied, with investment-grade health systems and major physician-owned medical groups comprising the majority of the tenant roster. Aside from tenancy, the portfolio is a mixed-bag, starting with location. The properties can be found in California, Colorado, Florida, Georgia, Illinois, Indiana, Nevada, New Jersey, New York, North Carolina, Tennessee and Texas. Additionally, the group includes facilities located on or near hospital campuses, and encompasses both single and multi-tenanted buildings. Greenwich, Conn.-based Starwood’s newly acquired portfolio is slightly different than the one detailed in the purchase and sale agreement the REIT entered into in September 2016. Originally, the deal involved 38 MOBs totaling 2.2 million square feet at a price of $837.9 million. As for the financing, Starwood’s plan was to enter into a credit agreement for a five-year secured term loan facility for as much as $579 million. Even minus the handful of properties originally included in the group, the portfolio is still quite a catch.” (Commercial Property Executive)
  8. Houston Hotels to Enjoy Significant Growth From Super Bowl 51 “According to a projections by STR, the overall hotel industry in Houston will see overall performance growth between 150% and 350% during Super Bowl 51 weekend. ‘The most difficult aspect in projecting Houston's Super Bowl performance is the current state of that market,’ said Claudia Alvarado, STR's analytics manager. ‘Lower demand caused by the oil crisis and rapid supply growth combined for a 9.1% decrease in occupancy for 2016--the worst among U.S. Top 25 Markets. Thus, there are two schools of thought on how performance may fare around the game at NRG Stadium. While it is possible for the soft performance to extend to the Super Bowl, we expect a sharp spike in occupancy and room prices.’ For the purposes of its projection, STR noted that each of the last nine Super Bowl host markets experienced year-over-year revenue-per-available-room growth of more than 100%, including Houston in 2004 (+384%). At the same time, the larger the host market, the lower the overall RevPAR gain, such as New York City in 2014 (+115%). The largest year-over-year jump in RevPAR during the past nine Super Bowl weekends came in the smallest of the host markets, Indianapolis in 2012 (+1,082%). During its previous Super Bowl host year in 2004, Houston saw RevPAR gains of 358.3% on Friday, 385.1%on Saturday and 411.1% on Sunday.” (World Property Journal)
  9. West Loop apartment project scores $118 million construction loan “The developer of a big West Loop apartment project has scored a construction loan from Bank of the Ozarks, a sign that lenders aren't quite ready to take the punch bowl away from the multifamily-building party. A joint venture including Skokie-based F&F Realty secured a $117.8 million loan from the Little Rock-based bank for a 492-unit apartment development at the corner of Halsted and Madison streets, said Mark Lecocq, senior vice president at Fifield, which is building the tower for the venture. Workers are preparing the site for construction, and Fifield expects to complete the project in fourth-quarter 2018, he said. Bank of the Ozarks has emerged as one of the most aggressive construction lenders in downtown Chicago over the past few years. The bank recently provided a $203 million loan for One Grant Park, a 76-story apartment development in the South Loop, and a $233 million loan for an office tower that John Buck is building in the Loop.” (Crain’s Chicago Business)
  10. Ft. Lauderdale’s Tallest Building Tops Off “Moss & Associates has topped off Fort Lauderdale’s tallest building to date, the 45-story Icon Las Olas, the company announced recently. The $160 million luxury residential project is being developed in partnership with the Related Group and Rabina Properties…Located at 500 E. Las Olas Blvd., the building consists of 272 luxury residential units ranging from 960 to 1,926 square feet. Designed by Sieger Suarez Architects, the 826,385-square-foot property with waterfront views features a sky terrace, smart building technology, luxury spa, state-of-the-art fitness center, wine cellar, retail and restaurants, as well as a seven-story parking garage.” (MultiHousing News)
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